Raymond Chimhandamba, , Handas Consulting, Johannesburg, South Africa11.02.18
There is a saying that goes…..”The only constant is change”… or something like that. It also reminds me of another advert that has stayed with me. I think it ran about six or seven years ago in South Africa. At the time it was of course not only correct but very apt. This was at the time when Tiger Woods was the world’s top golfer and Eminem was the world’s top rapper. It went like this: “The world’s top golfer is black. The world’s top rapper is white. The world is changing…Shouldn’t you?”
This article is about change. Disruptive change. I intend to share some of the disruptions in our industry that I have really admired and rate very highly, and also some of the disruptions that I think are ready to happen and/or can happen. I have also stuck to my lane by staying with in-market disruptions. There probably are some product innovations that have happened out there that I have missed, so you will excuse me. I am staying with in-market or in-trade disruptions.
Unicharm
By far the disruption that I think has been very successful is that of Unicharm with pants diapers in the emerging markets of Asia. It was truly “out of the box” thinking. As far as baby diapers go, pants diapers are always associated with premium offerings. So to think that a leading diaper manufacturer would think…lets’ take premium diapers to an emerging market like India and China, was quite counter intuitive. I can’t help but smile to myself when I imagine the stares and looks that the first person to propose this idea must have got during that brainstorming session. It must have been a totally radical thought. They say that retrospect is the best teacher. Now we look back and Unicharm is on their third factory in India and pants have an 80% marketshare. They also had a clear strategy that they will take pant diapers to these poor markets and we will make it work. And they identified their partners. Everyone else is following. Before that I believe Japan was the global market with the highest penetration for pull up diapers.
Individually Wrapped Single Diapers
I think the other innovation that Unicharm did, at the same time that they launched pants, was having single individually wrapped diapers that were joined together into a strand of 8 or 12. It so happens that poor markets can actually buy a diaper a day and this actually helps the buyer very much. It helps on several levels. In some low income markets they bulk break and open packets and sell diapers by the piece, in which case it means a lot of people with not so clean hands are going to touch and handle the baby’s diaper before it’s put on the baby. This may not be desirable to the mother. But having an individually-wrapped single diaper allows the manufacturer to say, “You may be poor but I respect you and your child.” It may come as a surprise that in a world that seems so driven by marketing, and a world where we are bombarded by marketing messages like no other time in mankind’s entire history, that this point of respecting your customer is not so obvious. But that is a discussion for another day.
In addition, from personal experience, the individually wrapped diaper automatically offers a level of convenience at launch phase which becomes an innovation on its own. During in-store activations when you need to give away samples of just one diaper to a mother, you are able to do so. And you will know 100% that she is a user of the product and you will also give her 100% the correct size, because she will be there personally to tell you so. You will have the wonderful opportunity to speak to the mother directly, in person and interact with her, educate her on how to put it on and how to remove it. If she has questions she will have a chance to ask. She can even tell you what she values most in a diaper and you can even ask her what she likes in her current brand. etc. She will walk away with your product to try. She will have the packaging in her hand. She will remember the colors. She will have the correct size for her baby. All these elements coming together, at the right interactive moment (key word being interactive) makes for a really powerful user conversion moment. Not only personal, this moment is also very important for its educational value. I learned later that some of the mothers had tried to remove the used diaper without simply tearing the sides. A moment that is literally the mother of all innovations in one moment.
The other reason that makes the above moment special is the opportunity to educate the customer how to put on and remove the pull up diaper. Remember that in a market where it is new, the consumers may be at a loss on how to put on and remove a pull up diaper. I leave you to imagine how stressful and traumatic that experience alone can be for a mother. Let alone for the uncle or aunt, who may not be a parent but has volunteered to look after his niece or nephew for the day! Armed with this knowledge, which we had received from the early adopters, when we launched Mamy Poko pant diapers, we used to emphasize with every in-store interaction with the consumers,that the used diaper tears easily, as is expressed in the advert.
Interestingly, Kimberly-Clark in South Africa also launched a Jumbo pack of Huggies that were individually wrapped. This innovation was a huge success for them. It meant that the Jumbo pack was handy in several channels. To the mother in the wholesaler or retail outlet. The hawker who sells from the flea market/open markets can also buy the same pack for resale.
Five Packs
After the single individually wrapped diaper, the next size for Mamy Poko was five packs for all sizes. Sometimes innovation can come in such a simple format and yet the impact can be unbelievably massive. It is one of those small and simple initiatives or changes that have a massive impact. The five-pack has pretty much the same impact in low income markets. It allows for that low price point for a good quality/high quality product that the low end consumer can afford. The five-pack is that gift that keeps on giving. It is that silver bullet that has a massive impact. I have no doubt this was one of the key points that allowed Unicharm to win in low income markets. And, they are not forgetting the high end consumer who wants to save by buying economy or buying the bigger packs or even Jumbo packs because he/she can afford it. The economy packs are also available. So Unicharm was smart enough to fully cater for the full spectrum. In this battle, the company took no prisoners.
Possible Disruptions in African Markets
Okay… I am still on the five-pack. Molfix has done very well in Nigeria. In five years they amassed above 44% marketshare. Their success has been based on several factors, among them having a quality product at a good price versus the market leader and also their availability in all channels in the trade, from modern trade, independent neighborhood grocers and even in the rural areas. I believe one way of taking the game to the next level for Molfix is to have five packs for all sizes.
Informal Channel in South Africa and Across the Region
I strongly believe that a great opportunity exists in South Africa’s informal channel or Base of the Pyramid. Enough research exists that proves that the informal channel in South Africa is as big as 30-40% and this channel spends as much as 55% of their income on consumer products. According to a study done by a Danish organization and some of the consumer and business associations within low income channels in South Africa, the BoP segment of the market is receiving more and more attention from the big consumer players. Some players in the informal channel, such as RP International, have made a great success of their efforts in the informal channel over the years. Building great relationships that have allowed them to win, and they are now expanding to other provinces outside the Western and Eastern Cape.
P&G’s distribution partner, Diplomat Group, has also done a great job of getting Pampers into the informal channels and low income channels. Any diaper manufacturer who develops successful strategies and conquers the informal channel in one part of the African continent would be in the enviable position to roll out the same model, adapting it as necessary to suit local conditions. In some markets the informal channels are by far bigger than the modern trade, although change is coming.
Pull Ups in Nigeria
I have said it before and I will say it again. The first mover to introduce pants-style diapers in the Nigerian market, Africa’s biggest market by population size, and focuses on getting the basics right (i.e. price, quality, distribution, availability, marketing communication and execution) will disrupt the market significantly and capture market share. In addition, by ensuring the small price packs (individually wrapped singles and five packs) are available and in the right channels, I can only predict that they will win.
Diversification by Hygiene Players
There are not very many diaper manufacturers in Sub-Saharan Africa. P&G and Kimberly-Clark pretty much dominate these markets. But there are significant players within the toilet tissue, feminine care, pocket tissue, printed tissue and other hygiene categories. Some of these local players are so successful that they are number one or two in the categories they play in. The baby diaper category is looking so attractive regionally that we are seeing more and more of such players enquiring about possible partnerships with global/regional diaper manufacturers in the form of JV’s or selling a stake in their operations. Their interest is to diversify into diaper manufacturing but would like to do it with an experienced partner who has patented claims that they can use in the market to claim market share.
This article is about change. Disruptive change. I intend to share some of the disruptions in our industry that I have really admired and rate very highly, and also some of the disruptions that I think are ready to happen and/or can happen. I have also stuck to my lane by staying with in-market disruptions. There probably are some product innovations that have happened out there that I have missed, so you will excuse me. I am staying with in-market or in-trade disruptions.
Unicharm
By far the disruption that I think has been very successful is that of Unicharm with pants diapers in the emerging markets of Asia. It was truly “out of the box” thinking. As far as baby diapers go, pants diapers are always associated with premium offerings. So to think that a leading diaper manufacturer would think…lets’ take premium diapers to an emerging market like India and China, was quite counter intuitive. I can’t help but smile to myself when I imagine the stares and looks that the first person to propose this idea must have got during that brainstorming session. It must have been a totally radical thought. They say that retrospect is the best teacher. Now we look back and Unicharm is on their third factory in India and pants have an 80% marketshare. They also had a clear strategy that they will take pant diapers to these poor markets and we will make it work. And they identified their partners. Everyone else is following. Before that I believe Japan was the global market with the highest penetration for pull up diapers.
Individually Wrapped Single Diapers
I think the other innovation that Unicharm did, at the same time that they launched pants, was having single individually wrapped diapers that were joined together into a strand of 8 or 12. It so happens that poor markets can actually buy a diaper a day and this actually helps the buyer very much. It helps on several levels. In some low income markets they bulk break and open packets and sell diapers by the piece, in which case it means a lot of people with not so clean hands are going to touch and handle the baby’s diaper before it’s put on the baby. This may not be desirable to the mother. But having an individually-wrapped single diaper allows the manufacturer to say, “You may be poor but I respect you and your child.” It may come as a surprise that in a world that seems so driven by marketing, and a world where we are bombarded by marketing messages like no other time in mankind’s entire history, that this point of respecting your customer is not so obvious. But that is a discussion for another day.
In addition, from personal experience, the individually wrapped diaper automatically offers a level of convenience at launch phase which becomes an innovation on its own. During in-store activations when you need to give away samples of just one diaper to a mother, you are able to do so. And you will know 100% that she is a user of the product and you will also give her 100% the correct size, because she will be there personally to tell you so. You will have the wonderful opportunity to speak to the mother directly, in person and interact with her, educate her on how to put it on and how to remove it. If she has questions she will have a chance to ask. She can even tell you what she values most in a diaper and you can even ask her what she likes in her current brand. etc. She will walk away with your product to try. She will have the packaging in her hand. She will remember the colors. She will have the correct size for her baby. All these elements coming together, at the right interactive moment (key word being interactive) makes for a really powerful user conversion moment. Not only personal, this moment is also very important for its educational value. I learned later that some of the mothers had tried to remove the used diaper without simply tearing the sides. A moment that is literally the mother of all innovations in one moment.
The other reason that makes the above moment special is the opportunity to educate the customer how to put on and remove the pull up diaper. Remember that in a market where it is new, the consumers may be at a loss on how to put on and remove a pull up diaper. I leave you to imagine how stressful and traumatic that experience alone can be for a mother. Let alone for the uncle or aunt, who may not be a parent but has volunteered to look after his niece or nephew for the day! Armed with this knowledge, which we had received from the early adopters, when we launched Mamy Poko pant diapers, we used to emphasize with every in-store interaction with the consumers,that the used diaper tears easily, as is expressed in the advert.
Interestingly, Kimberly-Clark in South Africa also launched a Jumbo pack of Huggies that were individually wrapped. This innovation was a huge success for them. It meant that the Jumbo pack was handy in several channels. To the mother in the wholesaler or retail outlet. The hawker who sells from the flea market/open markets can also buy the same pack for resale.
Five Packs
After the single individually wrapped diaper, the next size for Mamy Poko was five packs for all sizes. Sometimes innovation can come in such a simple format and yet the impact can be unbelievably massive. It is one of those small and simple initiatives or changes that have a massive impact. The five-pack has pretty much the same impact in low income markets. It allows for that low price point for a good quality/high quality product that the low end consumer can afford. The five-pack is that gift that keeps on giving. It is that silver bullet that has a massive impact. I have no doubt this was one of the key points that allowed Unicharm to win in low income markets. And, they are not forgetting the high end consumer who wants to save by buying economy or buying the bigger packs or even Jumbo packs because he/she can afford it. The economy packs are also available. So Unicharm was smart enough to fully cater for the full spectrum. In this battle, the company took no prisoners.
Possible Disruptions in African Markets
Okay… I am still on the five-pack. Molfix has done very well in Nigeria. In five years they amassed above 44% marketshare. Their success has been based on several factors, among them having a quality product at a good price versus the market leader and also their availability in all channels in the trade, from modern trade, independent neighborhood grocers and even in the rural areas. I believe one way of taking the game to the next level for Molfix is to have five packs for all sizes.
Informal Channel in South Africa and Across the Region
I strongly believe that a great opportunity exists in South Africa’s informal channel or Base of the Pyramid. Enough research exists that proves that the informal channel in South Africa is as big as 30-40% and this channel spends as much as 55% of their income on consumer products. According to a study done by a Danish organization and some of the consumer and business associations within low income channels in South Africa, the BoP segment of the market is receiving more and more attention from the big consumer players. Some players in the informal channel, such as RP International, have made a great success of their efforts in the informal channel over the years. Building great relationships that have allowed them to win, and they are now expanding to other provinces outside the Western and Eastern Cape.
P&G’s distribution partner, Diplomat Group, has also done a great job of getting Pampers into the informal channels and low income channels. Any diaper manufacturer who develops successful strategies and conquers the informal channel in one part of the African continent would be in the enviable position to roll out the same model, adapting it as necessary to suit local conditions. In some markets the informal channels are by far bigger than the modern trade, although change is coming.
Pull Ups in Nigeria
I have said it before and I will say it again. The first mover to introduce pants-style diapers in the Nigerian market, Africa’s biggest market by population size, and focuses on getting the basics right (i.e. price, quality, distribution, availability, marketing communication and execution) will disrupt the market significantly and capture market share. In addition, by ensuring the small price packs (individually wrapped singles and five packs) are available and in the right channels, I can only predict that they will win.
Diversification by Hygiene Players
There are not very many diaper manufacturers in Sub-Saharan Africa. P&G and Kimberly-Clark pretty much dominate these markets. But there are significant players within the toilet tissue, feminine care, pocket tissue, printed tissue and other hygiene categories. Some of these local players are so successful that they are number one or two in the categories they play in. The baby diaper category is looking so attractive regionally that we are seeing more and more of such players enquiring about possible partnerships with global/regional diaper manufacturers in the form of JV’s or selling a stake in their operations. Their interest is to diversify into diaper manufacturing but would like to do it with an experienced partner who has patented claims that they can use in the market to claim market share.
